A modern guide to financial shocks and crises

Contents:

Preface ix

PART I FINANCIAL INSTABILITY AFTER THE GLOBAL
FINANCIAL CRISIS: TAXONOMY AND MODELS
1. The Global Financial Crisis 2
Vincenzo D’Apice and Giovanni Ferri
2. Minsky’s financial instability hypothesis 22
Maria Nikolaidi
3. Financial accelerator framework 45
Tommaso Oliviero and Giovanni W. Puopolo

PART II MAIN CHANNELS OF TRANSMISSION OF THE
FINANCIAL SHOCK
4. The role of the household balance sheets 66
Christophe André
5. The European network of cross-border lending 93
Ornella Ricci and Francesco Saverio Stentella Lopes
6. International banks and the transmission of financial shocks 111
Eugenio Cerutti and Haonan Zhou
7. The role of bank ownership types and business models 135
Giorgio Caselli
8. The role of market valuation in financial crises 159
Paola Bongini and Emanuele Rossi

PART III THE ROLE OF PUBLIC POLICIES
9. Reflections on the shifting consensus about monetary and
fiscal policies following the GFC and the COVID-19 crises 180
Alex Cukierman
10. Fiscal policy lessons since the Global Financial Crisis 199
Jérémie Cohen-Setton
11. The government as lender of last resort and temporary owner 212
Aneta Hryckiewicz
12. The sovereign-bank nexus 241
Giovanni Ferri and Valerio Pesic
13. Financial reforms 262
Alexandre Garel and Arthur Petit-Romec

PART IV LEARNING FROM PAST FINANCIAL CRISES TO
PREVENT FUTURE ONES
14. Looking back: a historical perspective on European crises 289
Elias Bengtsson
15. Looking ahead: early warning systems 314
E. Philip Davis and Dilruba Karim

Offering a comprehensive guide to financial shocks and crises, this book explores their increasing occurrence in current market economies, as well as their power to wrench the macroeconomy. It discusses three critical questions: what causes financial shocks; which channels may exacerbate their impact; and what policies could help avoid them or limit their negative effect on the economy and society at large.

Drawing together contributions from top scholars in the field, this Modern Guide addresses both the causes and consequences of financial instability after the Global Financial Crisis (GFC) at both micro and macro levels. Chapters conceptualise financial crises, highlight their main channels of transmission, and explore the role of public policies, looking at how to learn from past financial crises to prevent future ones. The book further examines why financial shocks will be a permanent trait in the future, and the potential impacts of market economics continuing to expand financialisation as they have done over recent decades.

This Modern Guide will be a timely resource for economics students and scholars, particularly as it compares the impacts of the GFC and Covid-19 and explores why these are so different. It will also be an important read for policy makers seeking advice on how to manage and avoid financial crises.